Milk prices open higher

Opening milk prices are higher for the 2021/22 season than the previous year.

This is partly driven by improvements in global market fundamentals. Global demand for dairy has been growing, and seen commodity prices edge upwards.

Global supply of dairy is growing too, but for now an increase in demand has seen commodity prices rise.

Furthermore, there is very strong competition for milk amongst processors in Australia

Australia's milk pool has been stagnant for the last few years, and processors have to compete against each other to secure enough milk. This has helped to drive this increase in the price farmers are paid.

The new Dairy Industry Code, which came into force on 1 January 2020, ensures that all companies that want to buy milk in Australia has to announce the minimum price they are going to pay for the whole season by 2pm on 1 June each year.

This is to ensure farmers can compare offers between processors.

The minimum price announced is what the processors must pay farmers for the whole season, and this process was implemented to stop retrospective price-step downs (as occurred in 2016).